Due to the increasing demand for AI-enabled devices and the growing complexity of the supply chain, businesses are bracing for a potential limited supply of AI chips.

The memory of the Covid shortage of CPU chips is still fresh of when TSMC, a company that produced over half of the world’s CPU chips, utilized 156,000 tons of water daily for chip production, but suddenly, the water source dried up. During the epidemic, Taiwan experienced the worst drought in over 50 years, and due to the water-intensive process of cleaning the numerous metal layers that comprise CPUs, we faced a shortage of chips.

We are currently facing a potential shortage of new AI chips. The industry of AI chip makers and users is a complex one, as you will discover if you continue reading. Some companies are making AI chips, and some are renting them out via the cloud. Well-known companies need the AI chips for training models and learning, some for even deeper learning, and others to enhance productivity and efficiency. The US government has implemented various export controls to limit the sale of high-performance AI GPUs to China, with the aim of preventing the technology’s use in military applications and addressing national security concerns.

The dominant AI chip manufacturer is TSMC located in Taiwan. However, new manufacturers in the US are striving to reduce the cost of AI chips and establish multiple sources of supply. CPU chip manufacturers such as Intel are now focusing on AI chips. TSMC and Nvidia are also discussing a deal to build a new plant in Arizona.

CPUs (Central Processing Units) are the primary components of computers that process instructions and data to perform computing tasks. AI chips optimize their performance to meet the intensive computational demands of AI tasks such as machine learning, deep learning, and natural language processing.

Ultimately the people use AI chips, but specifically Google, Apple, Amazon, Microsoft, and many more are developing AI chips designed to work with their specific engines. A number of companies are using AI chips either by purchasing them or renting them. Apple pays to access them from Amazon, Microsoft, and Google.

The main applications of AI chips include training models for data processing and computations, operating these trained models, and implementing on-device AI for mobile devices. Neuromorphic computing, which mimics brain-like processing, and the design of energy-efficient AI chips are currently under development.